Natural rate of unemployment

Most people understand intuitively that being unemployed means not having a job. That said, it's important to understand more precisely how unemployment is measured in order to properly interpret and make sense of the numbers that appear in the newspaper and on television.

Officially, a person is unemployed if he or she is in the labor force but does not have a job. Therefore, in order to calculate unemployment, we need to understand how to measure the labor force.

Who is considered unemployed

The Labor Force

The labor force in an economy consists of those people who want to work. The labor force is not equal to the population, however, since there are usually people in a society who either don't want to work or are unable to work.

Examples of these groups include full-time students, stay-at-home parents, and the disabled.

Note that "work" in an economic sense strictly refers to work outside of the home or school, since, in a general sense, students and stay-at-home parents do plenty of work!

For specific statistical purposes, only individuals age 16 and older

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explain how unemployment rate is calculated